Daily newspapers have been in decline for years, but abundant signs suggest that a tipping point is nearing when long-established local institutions — whether adored, reviled or taken for granted — are about to be altered drastically.
The one-two combination of technological change and crass financial opportunism is roiling the entire industry, and the effects are obvious in Connecticut.
The Hartford Courant bills itself as the nation’s oldest, continuously published newspaper, but that legacy is in danger in the hands of Sam Zell, the real estate mogul who recently bought the Tribune Co., the Courant’s parent company, for $13 billion in a leveraged buyout.
Zell announced this month that he intends to “right-size” The Courant by slashing published pages and an unspecified number of reporters.
Although Zell recently insisted in a conference call with Wall Street analysts that the Tribune is a media company, not a real estate company, he went on to admit that he’s prepared to flip the buildings that house his other new toys in the Tribune fold: The Los Angeles Times, The Chicago Tribune, The Orlando Sentinel and The Baltimore Sun.
Listening carefully to the words of Zell and his chief operating officer, Randy Michaels, it’s clear that the name of the game is generating cash to service massive debt at a time when Tribune newspaper ad revenues are sagging (down 15 percent in the first quarter). There’s not even time for lip service to Hartford’s long tradition of journalism as a public service.
Michaels told the analysts there’s big money to be saved by cutting the news/advertising ratio at papers to 1-to-1 (it’s 2-to-1 at The Courant) and by cutting reporters. “You can eliminate a fair … number of people while eliminating not very much content,” Michaels said, according to a transcript of the call posted on SeekingAlpha.com. “This is going to happen quickly.”
Zell chimed in, saying, “I promise you he’s underestimating the level of aggressiveness with which we are attacking this whole challenge.”
While Zell plans to “right-size” his big city papers, smaller newspapers across Connecticut have announced similar plans to cut editorial staff. JRC Corp., which owns The New Haven Register and dozens of smaller Connecticut newspapers, was delisted this spring by The New York Stock Exchange after failing to keep its share price above the $1 minimum, despite cuts in several newsrooms. The Day Publishing Co. in New London recently laid off 9 percent of its staff.
Newspapers have been under financial pressure for years, but the Newspaper Association of America reported that the 8 percent decline in ad revenues in 2007 was the worst drop in 50 years. Revenues from newspaper advertising, especially classified ads, are plunging.
As younger readers gravitate toward the Web, many newspapers have changed with the times by developing their own Web sites. But there’s a problem. Most of the money to be made in web advertising is tied to search engines, not to sites that specialize in content. So it’s a challenge for newspapers to replace the money lost by newspaper ads with money from Web ads.
For newspapers, the next obvious step is slashing editorial staff, according to Rupert Murdoch, owner of News Corp., which recently purchased The Wall Street Journal.
In an interview published last week in the Journal, Murdoch said, “Now, over the last 10 to 15 years, they have made every economy possible in production, with computers and so on, but not in journalism. Now they have to turn to journalism, and they are going to deteriorate tremendously.”
And so, debt service beats out public service.
